FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 3, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ___________________
Commission file number 1-12604
THE MARCUS CORPORATION
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1139844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 EAST WISCONSIN AVENUE - MILWAUKEE, WISCONSIN 53202
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (414) 272-6020
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934, during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
COMMON STOCK OUTSTANDING AT FEBRUARY 3, 1994 - 6,746,127
CLASS B COMMON STOCK OUTSTANDING AT FEBRUARY 3, 1994 - 6,271,264
THE MARCUS CORPORATION
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Balance Sheets
(February 3, 1994 and May 27, 1993) 1 - 2
Statements of Earnings
(Twelve and thirty-six weeks ended
February 3, 1994 and February 4, 1993) 3
Statements of Cash Flows
(Thirty-six weeks ended February 3, 1994
and February 4, 1993) 4
Condensed Notes to Financial Statements 5
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 6 - 7
PART I - Financial Information
Item 1. Financial Statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
February 3, May 27,
ASSETS 1994 1993
------------------------------------------------------------------------
CURRENT ASSETS: (unaudited)
Cash and cash equivalents $ 15,387,000 $ 15,839,000
Accounts and notes receivable 7,905,000 5,497,000
Receivables from joint ventures 6,732,000 10,372,000
Other current assets 2,314,000 1,674,000
------------ ------------
Total current assets 32,338,000 33,382,000
------------ ------------
PROPERTY AND EQUIPMENT:
Land and improvements 48,314,000 41,919,000
Buildings and improvements 232,938,000 209,891,000
Leasehold improvements 10,516,000 8,150,000
Furniture, fixtures and equipment 119,352,000 103,935,000
Construction in progress 10,729,000 13,174,000
------------ ------------
Total property and equipment 421,849,000 377,069,000
Less accumulated depreciation
and amortization 123,729,000 109,228,000
------------ ------------
Net property and equipment 298,120,000 267,841,000
------------ ------------
OTHER ASSETS:
Investment in and advances to
joint ventures 1,318,000 1,223,000
Other 4,153,000 7,009,000
------------ ------------
Total other assets 5,471,000 8,232,000
------------ ------------
TOTAL ASSETS $335,929,000 $309,455,000
============ ============
See accompanying notes to consolidated financial statements
THE MARCUS CORPORATION
Consolidated Balance Sheets
February 3, May 27,
LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993
------------------------------------------------------------------------
CURRENT LIABILITIES: (unaudited)
Notes payable $ 4,343,000 $ 5,017,000
Accounts payable 5,942,000 6,850,000
Income taxes 4,668,000 261,000
Taxes other than income taxes 7,225,000 7,319,000
Accrued compensation 2,687,000 1,554,000
Other accrued liabilities 3,508,000 5,706,000
Current maturities on long-term debt 5,019,000 10,503,000
------------ ------------
Total current liabilities 33,392,000 37,210,000
------------ ------------
LONG-TERM DEBT 97,013,000 78,995,000
------------ ------------
DEFERRED INCOME TAXES 14,945,000 16,138,000
------------ ------------
DEFERRED COMPENSATION AND OTHER 3,588,000 3,132,000
------------ ------------
SHAREHOLDERS' EQUITY
Preferred Stock, $1 par; authorized
1,000,000 shares; none issued
Common Stock, $1 par; authorized
20,000,000 shares; issued 7,320,056
shares at February 3, 1994,
7,269,457 shares at May 27, 1993 7,320,000 7,269,000
Class B Common Stock, $1 par;
authorized 9,000,000 shares;
issued 6,271,264 shares at
February 3, 1994, 6,321,863
shares at May 27, 1993 6,271,000 6,322,000
Capital in excess of par 44,523,000 44,557,000
Retained earnings 133,242,000 120,429,000
------------ ------------
191,356,000 178,577,000
Less cost of treasury stock
Common stock - 574,779 shares
at February 3 and 604,117
shares at May 27 4,365,000 4,597,000
------------ ------------
Total shareholders' equity 186,991,000 173,980,000
------------ ------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $335,929,000 $309,455,000
============ ============
See accompanying notes to consolidated financial statements
THE MARCUS CORPORATION
Consolidated Statements of Earnings
(unaudited)
February 3, 1994 February 4, 1993
----------------------- -----------------------
12 Weeks 36 Weeks 12 Weeks 36 Weeks
------------- ------------ ------------ ------------
Revenues:
Food and beverage $17,918,000 $ 56,175,000 $14,881,000 $ 47,005,000
Rooms and telephone 18,689,000 68,608,000 16,859,000 62,722,000
Theatre operations 12,026,000 37,582,000 12,731,000 31,497,000
Other income 3,120,000 9,593,000 1,841,000 6,450,000
--------------------------- --------------------------
51,753,000 171,958,000 46,312,000 147,674,000
--------------------------- --------------------------
Costs and Expenses:
Food and beverage 14,877,000 44,240,000 12,107,000 36,505,000
Rooms and telephone 8,458,000 25,950,000 7,312,000 23,039,000
Theatre operations 7,030,000 22,208,000 7,409,000 18,932,000
Administration and selling 8,026,000 25,531,000 7,361,000 22,579,000
Depreciation and amortization 4,566,000 13,697,000 4,123,000 12,241,000
Rent 978,000 3,131,000 640,000 2,291,000
Property taxes 2,007,000 6,034,000 1,870,000 5,644,000
Other costs and expenses 182,000 1,487,000 818,000 2,246,000
Interest 1,593,000 4,991,000 1,777,000 5,618,000
--------------------------- --------------------------
47,717,000 147,269,000 43,417,000 129,095,000
--------------------------- --------------------------
Earnings before income taxes and change
in accounting principle 4,036,000 24,689,000 2,895,000 18,579,000
Income Taxes 1,813,000 10,177,000 1,275,000 7,626,000
------------ ----------- ----------- -----------
Earnings before change in accounting
principle 2,223,000 14,512,000 1,620,000 10,953,000
Cumulative effect of change in accounting
principle - 1,782,000 - -
------------ ------------ ----------- ------------
Net Earnings $ 2,223,000 $ 16,294,000 $ 1,620,000 $ 10,953,000
============ ============ =========== =============
Net Earnings per weighted average share
of Common Stock and Class B Common Stock
Earnings before accounting principle
change $0.17 $1.11 $0.14 $0.97
Cumulative effect of change in
accounting principle - 0.13 - -
----------- ------------ ----------- ------------
Net earnings $0.17 $1.24 $0.14 $0.97
=========== ============ =========== ============
Weighted average shares outstanding 13,116,000 13,110,000 11,321,000 11,311,000
Dividends per Share
Common Stock $0.28 $0.26
Class B Common Stock $0.25 $0.23
See accompanying notes to consolidated financial statements
THE MARCUS CORPORATION
Consolidated Statements of Cash Flows
For the Thirty-Six Weeks Ended February 3, February 4,
(unaudited) 1994 1993
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 16,294,000 $ 10,953,000
Adjustments to reconcile net earnings
to cash provided by operating activities:
Earnings on investments in joint ventures (81,000) (499,000)
Gain on disposals of property and equip. (1,281,000) (77,000)
Depreciation and amortization 13,697,000 12,241,000
Effect of change in accounting principle (1,782,000) -
Deferred tax provision 589,000 116,000
Deferred compensation and other 456,000 791,000
Changes in assets and liabilities:
Accounts and notes receivable 1,232,000 (958,000)
Other current assets (640,000) (304,000)
Accounts and notes payable (1,582,000) 1,172,000
Income taxes 4,407,000 2,769,000
Taxes other than income taxes (94,000) 503,000
Accrued compensation 1,133,000 (748,000)
Other accrued liabilities (2,198,000) 198,000
------------ ------------
Cash provided by operating activities 30,150,000 26,157,000
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to property and equipment (46,026,000) (29,681,000)
Proceeds from disposals of property
and equip 3,331,000 947,000
(Investments in) distributions from
joint ventures (1,240,000) (2,443,000)
Decrease in other assets 2,856,000 1,682,000
Cash received from joint ventures 1,226,000 2,262,000
------------ ------------
Cash used in investing activities (39,853,000) (27,233,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt transactions:
Proceeds from issuance of long-term debt 39,650,000 5,228,000
Principal payments on long-term debt (27,116,000) (2,685,000)
Equity transactions:
Treasury stock transactions (except for
stock options) (148,000) (53,000)
Exercise of stock options 346,000 389,000
Cash dividend paid (3,481,000) (2,728,000)
------------ ------------
Cash provided (used) in financing activities 9,251,000 151,000
------------ ------------
CASH AND CASH EQUIVALENTS;
Net increase (decrease) during period (452,000) (925,000)
Beginning balance 15,839,000 8,099,000
------------ ------------
Ending balance $ 15,387,000 $ 7,174,000
============ ============
See accompanying notes to consolidated financial statements
THE MARCUS CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS
FOR THE TWELVE AND THIRTY-SIX WEEKS ENDED
(Unaudited)
A. Refer to the Company's audited financial statements (including
footnotes) for the year ended May 27, 1993, contained in Appendix A
to the Company's proxy statement for its 1992 annual meeting of
shareholders, for a description of the Company's accounting policies.
B. The consolidated financial statements for the twelve and thirty-six
weeks ended February 3, 1994 and February 4, 1993, have been prepared
by the Company without audit. In the opinion of management, all
adjustments consisting only of normal recurring accruals necessary to
present fairly the unaudited interim financial information at
February 3, 1994, and for all periods presented have been made.
C. Per share earnings for the prior year have been adjusted to reflect
the 50% stock dividend paid November 6, 1992.
D. In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes", which became effective for fiscal years beginning
after December 15, 1992. The Company adopted this standard on a
prospective basis effective August 19, 1993. The adoption resulted
in additional income of $1,782,000.
THE MARCUS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Marcus Corporation (the "Company") reports its results of operations
on a 52/53 week fiscal year which ends each year on the last Thursday in
May. The year is divided into three 12 week quarters and a final quarter
consisting of 16 or 17 weeks. The final quarter of fiscal 1994 will
consist of 16 weeks for all business segments; the same was true for
fiscal 1993.
Revenues for the third quarter of fiscal 1994, ended February 3, 1994,
totaled $51,753,000, an increase of $5,441,000 or 11.7% as compared to the
same period last year. Net earnings for the period were $2,223,000, 37.2%
greater than last year's $1,620,000. Earnings per share for the quarter
were $0.17 which represented a 21.4% increase over the $0.14 reported for
last year's third quarter. Per share earnings increased even though the
Company issued 1,755,000 shares in a secondary stock offering in March
1993.
During the first three quarters of fiscal 1994, the Company reported
revenues of $171,958,000, an increase of 16.4% from the same period in
fiscal 1993. The Company's earnings per share (excluding adjustments for
changes in accounting principles) for the first three quarters of fiscal
1994 were $1.11 versus $0.97 last year, an increase of 14.4%.
The Company's total earnings per share for the first half of fiscal 1994
were actually $1.24 due to a $0.13 per share adjustment resulting from a
change in accounting principle. Effective with the closing of fiscal
1994's first quarter, the Company adopted the Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes: (FASB 109)."
Although the third quarter is historically the Company's lowest earning
quarter due to the impact of cold weather on travel and leisure
activities, the Company achieved a record third quarter even though the
Midwest suffered its most severe winter in 15 years. The theatre
segment's strong performance was a primary reason for the Company's
excellent quarter. The segment enjoyed an increase in revenues of 14.6%
from the prior year's third quarter and the segment's earnings from
operations during the third quarter exceeded the prior period's earnings
by 57.6%. The segment expanded outside of Wisconsin in December of 1993
with the opening of a 10-screen theatre in Gurnee, Illinois. The segment
now operates 189 screens versus 186 at the close of the third quarter of
fiscal 1993.
Although the restaurant segment was affected by the severe cold
experienced throughout the Midwest, the segment's revenues for the third
quarter exceeded last year's third quarter revenues by 21.8% Although the
increased revenues did not translate into increased earnings due to
startup expenses for its new Gino's East Restaurant which opened in
Milwaukee in January and on-going first-year expenses for the segment's
new Applebee's Grill & Bar restaurants, the segment continues to modify
its make-up to continue its recent trend of improving profitability.
The hotel/motel segment produced both increased revenues and earnings
during the third quarter highlighted by an outstanding performance by the
segment's Budgetel Inns. Budgetel's success is attributable to an
increase in room occupancy of almost 4% as compared to the corresponding
period for fiscal 1993. Overall, the segment's revenues and earnings for
the third quarter increased by 10.4% and 7.6%, respectively, as compared
to last year's third quarter. The segment's Pfister Hotel in Milwaukee
also experienced a profitable quarter due primarily to increased
occupancy. The Pfister had been undergoing extensive renovations during
the third quarter of fiscal 1993 which have now been completed. During
the quarter, the segment also began operating the Mead Inn in Wisconsin
Rapids, Wisconsin, and looks forward to the opening of the Grand Geneva
Resort and Spa in Lake Geneva, Wisconsin, in the Summer of 1994.
During the third quarter, the Company closed a $20,000,000 long-term loan.
Concurrent with this closing, the Company prepaid $7,162,000 in mortgage
loans. This action was undertaken to reduce long-term interest costs.
The Company's capital expenditures through the third quarter of fiscal
1994 have totalled $46,000,000. Expenditures during the fourth quarter
should total $25,000,000 to $30,000,000. This level of capital
expenditures will require additional long-term debt of approximately
$15,000,000 which is currently being negotiated.
Working capital at the close of the quarter was .97 to 1.00 compared to
.66 to 1.00 at the close of last year's third quarter. The ratio at the
close of fiscal 1993 was .90 to 1.00. These ratios are deemed adequate
given the cash nature of the Company's business as well as the Standby
Line of Credit available.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MARCUS CORPORATION
(Registrant)
DATE: March 18, 1994 BY: /S/ Stephen H. Marcus
Stephen H. Marcus
Chairman of the Board,
President and Chief Executive
Officer
DATE: March 18, 1994 BY: /S/ Kenneth A. MacKenzie
Kenneth A. MacKenzie
Chief Financial Officer,
Treasurer and Controller